President Janet Napolitano

USC Pullias Lecture

February 18, 2015

President Janet Napolitano gave the 37th Pullias Lecture at USC in Los Angeles, CA on Feb. 18, 2015. Here are her remarks as prepared for delivery:

A Trifecta for the future: Higher education, California and innovation

It is an honor for me to be here to present the 37th Pullias lecture.

You might suspect that this is a sort of Nixon-to-China moment for me — the President of the University of California, home to Bruins and Bears alike, venturing into the heart of Trojan country.

In fact, however, there is precedent.

David Gardner, the 15th President of the University of California, delivered the 1986 installment of this prestigious lecture series.

Richard Atkinson, the 17th UC President, did the same in 1997.

And now you have me—Number 20 to my more veteran UC colleagues.

In his lecture, President Gardner addressed a nascent global transformation that, he forecast, would internationalize both the creation of and quest for knowledge, and ultimately alter the reach and mission of American research universities.

He
was a prescient man. The technological advances and economic shifts of the past
three decades have only accelerated the changes President Gardner saw coming. At
UC, we are waist-deep in efforts to keep the University ahead of the curve — in
research, in instruction, and in public service — as the forces of change and
realignment re-shape the world at large.

President
Atkinson, in his Pullias lecture, discussed the migration of research activity in
America away from private enterprise — the Bell lab model, if you will — and into
the realm of research universities, both public and private. He was of the view
that research, particularly university research, is not truly understood, and
therefore not appreciated, by the broader public.

He
closed his lecture with remarks that seem eerily current today. What he said
was this:

Quote.

“We
need to have a passionate conversation about higher education in California.

“This
conversation” — he said — “should encompass more than just the role of research
universities in economic growth (though that remains a critical topic for
California).

“But
this conversation should also recognize that the discovery and application of
knowledge are not at the periphery, but at the heart of what research universities are all about.

“To
remind Californians of that fact is not to devalue any other mission of the
university. It is simply truth in advertising.”

End
quote.

At
this point, I find myself tempted to simply add, “What he said.”

And
then call it a day.

As
it turns out, however, the close of President Atkinson’s lecture provides an
apt starting point for me to share the main message I want to bring to you this
afternoon.

That
message is this:

We
need to have a passionate conversation about higher education in California
today.

And
in particular, that conversation needs to focus on the unique role research
universities have played in making California a bastion of innovation, and a
world leader in its own right.

You
see, California was given one great gold rush. The world rushed in and almost
overnight, it seemed, California found itself on course to become the nation’s
“great exception,” to borrow a phrase from that great social commentator Carey
McWilliams (USC law, as you may know, Class of 1927).

But
the easy pickings were gone in a relative flash. And in the 165 years that have
followed, Californians have done the hard work of building and nurturing an
iconic society known to the world as a beacon of progress, hope, and
opportunity.

They
built it with a native creativity and ceaseless innovation, introducing to the
world everything from the silicon chip to fine Napa Valley wine to the wet suit.

They
built it with a strong sense of common purpose, fostering a true commonwealth
where those with dreams and ideas and notions about the next big thing found
themselves on equal footing with those born to privilege.

And,
in the spirit of a commonwealth, they built it with a deep commitment to
education and research — particularly public
education. That commitment, in time, would give rise to the 10-campus
University of California, to the Cal State system, and to the California
Community Colleges, as well as to private universities such as USC and Stanford
and Caltech and the Claremonts and all the rest.

These
were the institutions that in large measure produced the innovators and propelled
the innovation. Collectively, these were, and still are, California’s best
idea.

So,
now let’s turn to the present, and to the urgent, and still unabated, need for
the conversation President Atkinson proposed in his Pullias lecture of 1997.

Today—as
I am assured by our folks with the green eye shades and sharp pencils — the University
of California is funded by the state, in constant dollars, at the same level as
it was in 1997 — the very year President Atkinson came here to plead for a better
public understanding of the myriad and vast contributions research universities
make to California.

At
the same time, and with that same level of funding, the University of
California educates 75,000 more students than it did in 1997.

Same
level of funding.

Seventy-five
thousand additional students.

That’s
the statistical equivalent of adding an additional UCLA and UC Berkeley into
the mix – without receiving a dime more from the state.

I
find this to be a startling fact, and I believe it tells us many things.

One
thing it tells us is that, as I referenced earlier, the need for the urgent and
passionate conversation about higher education in California that Atkinson
referenced has not gone away. It has only grown.

But
there are other implications in this statistical compass point.

For
starters, there are national trends at work. There are trends involving
demographics, competing priorities, economics, and a diluted faith in common
purpose. Put another way, nobody in this country suddenly woke up and said
let’s stop funding public universities.

But
there are only so many taxpayer dollars to go around, and public higher
education finds itself competing with health services, public safety, and
corrections.

And
so it came to pass that, in the recent recession, 30 out of 50 states whacked their
state university budgets. In California alone, nearly one billion dollars in
funding for UC was cut after the economy went into freefall in 2008. Put
another way, the state cut its funding for UC’s core budget by 30 percent. Only
a portion of that has been restored as we recover. More precisely, the state
has restored only about half of the recession cuts even as UC continued to meet
demand and increase enrollment.

Also
contributing has been a societal drift away from the concept of a commonwealth.
Taxpayers who used to view education at the University of California as a public
investment increasingly now see it as a private good — one that ought to be paid
for by those individuals who derive a direct benefit from it, the students,
rather than as a public good to be provided by the state, for the state.

As
educators, we might disagree, passionately, with this view. And we might come
to the conversation with a quiver full of proof points demonstrating how
research universities touch and transform individual lives, and society as a
whole, far beyond their campus borders.

But
as advocates — as advocates — we should know going in that this is not as simple or
as easy a case to make as we would like to believe.

Now,
there are a few more points, more granular in nature, to be extracted from the
fact that the University of California today educates 75,000 more students than
it did in 1997 — but with the state level of state support.

First,
despite the national clamor about the rising costs of college, the “cost” (in quotes),
of educating a student from freshman year to graduation has not gone up.

In
fact, our numbers at UC suggest that the cost of producing a degree has been
flat or even diminished for some time. Our numbers are supported by external
studies, including those from the ongoing national Delta Cost Project and the
California-based PPIC.

One
factor contributing to this flat cost curve is positive. As administrators, and
as educators, we’ve become more efficient. At the depth of the recession, for
example, the University of California launched an efficiency initiative called
Working Smarter that to date has created more than $660 million in annual
savings and improved fiscal performance.

The
quest for efficiencies in a public institution must be a perpetual task, like
repainting the Golden Gate Bridge, that never comes to a finish. After arriving
in the fall of 2013, I launched an ongoing efficiency review of my own in the
central office. In this environment, every dollar that can be saved must be
saved. Every potential stream of new revenue must be explored.

But
“waste” and “cost” are not interchangeable terms. Blindly cutting costs for
cutting’s sake can lead to loss of quality. At the University of California, it
sometimes can feel as though our challenge from the state is to cut our way to
excellence.

Serving
75,000 more students at a 1997 level of funding makes it more and more
difficult to preserve, let alone enhance, the academic excellence that has long
been the secret sauce in UC’s recipe for success.

The
professor-to-student ratio becomes stressed — there are fewer instructors, and more
students per class. And there is greater difficulty for students to secure the
classes they need to graduate on time.

Rock
star professors and researchers, who serve as magnets to attract more of their
kind, become tougher to recruit and, once on board, to retain.

Needed
maintenance gets deferred — and in a seismically challenged state such as
California, neglecting the facilities for too long can prove to be risky
business.

And
finally, yes, there is the matter of tuition.

So
let’s talk about it.

There’s
a tendency to conflate the terms “rising tuition” and “increasing cost.”

What
has changed at the University of California, as I noted earlier, is not the
cost of producing an education. It is the amount of that cost borne by
students. In other words, a UC education was never free. It’s just that, with a
strong commonwealth spirit, taxpayers in previous eras underwrote that cost in
full.

They
no longer seem inclined at present to do so, and my sense is that their elected
officials in Sacramento are fully aware of this disinclination.

That
is why, in relatively short order, the amount paid by our students has come to
exceed the contribution from the state in UC’s core budget — 46 percent to 42
percent. That’s another startling marker of where we find ourselves today: A
public university where the students invest more than the state in their university.

Now,
let me clarify: when it comes to tuition, there is the sticker price, and there
is what is paid going out the door, so to speak.

Our
annual tuition now stands just north of $12,000 a year. To put that in
perspective, the price of four years at UC is equal to what
students would pay for one year at an
Ivy League school or, for that matter, USC or Stanford.

It
also is about what their families might pay for a nicely equipped Ford pick-up.
And a degree, unlike an F150, does not depreciate the moment you drive it off
the lot. In fact, the opposite is true. And it remains true for life.

That
said, half of UC’s tens of thousands of California resident undergraduates pay
no tuition at all. For those whose families earn $80,000 in income or less,
their tuition is covered fully through a financial aid program that blends
university-generated scholarship money with state and federal grants.

It’s
called the Blue and Gold Opportunity plan. And, as the promise embedded in this
plan has seeped into consciousness of more and more California communities, it has
helped push our application rates to record levels, year after year.

This
financial aid guarantee also means that our student bodies are increasingly
filled with a large percentage of Californians who are of the first generation
in their family to attend college. Fully 42 percent of our undergraduate
students are the first in their families to attend college. That’s 79,000
students. And hopefully, as these students graduate and later go on to start families
of their own, they won’t be the last.

This
is how a society transforms itself, individual by individual, family by family,
community by community.

And
this suggests to me, strongly, that a robust University of California provides
something far greater than a private good to those who attend one of its
campuses.

Add
in the matter of creating new knowledge through research, and moving the
innovations borne of that research to market, if you will, and the university’s
value to the state expands by limitless multiples.

And
so the stakes are high — very high — when it comes to the University of California.
And given both those stakes and the hits we took in the recession, the stewards
of the university — myself included — have come to the conclusion that action is
demanded.

With
that in mind, this past November we at UC made the decision to move forward
with a new tuition and financial aid plan. This plan will add 5,000 more
California students to UC. It will invest in academic quality. And it will
ensure a necessary — and currently absent — stability to the budget-setting process
for the University.

Critically,
we looked to a longer horizon line than just the next budget cycle when we
formulated this plan. The plan is capped at a 5 percent tuition increase for
each of five years, but this is only a contingency. The state can reduce or
eliminate those increases with additional
funding. In fact, just $100 million from California’s $113 billion
budget would eliminate the need for any tuition increase next year.

Today, members of my staff are testifying before the State Senate
Budget and Fiscal Review Committee. I am engaged in ongoing meetings with
Governor Brown. The UC Regents have appointed us as the two members of a Select
Advisory Committee. And in talking with our state leaders — including Speaker
Atkins and President Pro Tem de Leon — I am optimistic that this collective
process will end in a good place not just for the University of California, but
for all Californians.

The Regents and I are serious about maintaining the affordability of a
UC education. We are also serious about maintaining the quality of a UC education, and we are serious about increasing the
enrollment of California undergraduates. The Select Advisory Committee
discussions are significant and in depth. They represent a serious
collaboration between me and Governor Brown.

Because these
discussions are still ongoing, and because the legislature is still at work putting together the state budget, I am
announcing here today that UC will not implement a previously approved tuition increase of up to 5 percent for the summer quarter.

We are doing this as a good faith
gesture, optimistic that the ongoing negotiations
will bear fruit. It is our conviction
that all parties engaged in these negotiations want tuition to be as low as
possible, and as predictable as possible. Moreover,
as a matter of fairness, we want potential summer quarter students to
enroll free from any uncertainty and
unpredictability inherent in a fluid and still
unresolved budget situation.

Appropriate
notices to this effect have been sent out. We are gratified by the many
legislators who have expressed support for increased funding for UC. And it is
my most fervent hope that we will be able to reach a funding agreement with
Sacramento that will be sufficient to forestall any in-state tuition increase
for at least the next academic year as well.

In
a larger sense, however, our negotiations with the state over funding for UC
are not about dollars. They are about a down payment on the future of
California. Full investment in UC is ultimately a full investment in the
California dream.

You
see, there is only one thing worse than charging families more to send their
children to the University of California.

And
that is providing a University of California education that is of deteriorating
quality. It is a decline in the robust research that, beyond the new knowledge
it creates, is integral to the educational experience at a research university.
It is putting the University on a pathway to mediocrity that, in time, will
ripple out through the California economy, through the California society, and,
ultimately, may tear asunder the very idea of California itself.

We
are in a struggle for both the beating heart and brainstem of what makes
California what it is.

My
peers at California’s great private research universities certainly know this. A
few months ago, Thomas Rosenbaum, the President of Cal Tech, and Stanford President
John Hennessy co-published a piece in the San
Francisco Chronicle that made what at first blush might seem to be a
counter-intuitive point:

Quote.

“You
might think,” they wrote, “that as the presidents of Stanford and the
California Institute of Technology, we might view UC campuses primarily as
rivals. This is not so. Our campuses are partners in making the state of
California the economic and innovation powerhouse it is today.”

The
piece continued:

“As
research universities, the University of California, Stanford and Caltech” —
and here let me add USC — “all undertake basic research and translate the discoveries
into products and companies, powering an engine of innovation and economic
growth.

“Universities
act as magnets for talent, making California schools the destination of choice
for many of the most creative people in the world. The inventions, medical
breakthrough and products that emerge from their research benefit communities
across California and beyond.”

And
then they wrote this:

“Much
of the world-class research conducted on our campuses is inextricably linked”—inextricably linked— “with research
emanating from UC. If California is to remain an economic dynamo, then it needs
the full capability of its research universities to be well supported.”

Let
me repeat: “If California is to remain an economic dynamo, then it needs the
fully capability of its research universities to be well supported.”

Once
again—what they said.

There
are ten UC campuses, all public research universities in their own right, and
three major private research universities in California. And we are all in this
together. This is why earlier this afternoon, when I met with President Nikias
[Nih-KEE-us], we discussed ways in which the thirteen leaders of those California
research universities can work together as advocates, and lead the conversation
about the unique contributions research universities bring not only to our
great nation, but also — crucially and specifically — to our great state.

Our
universities already collaborate in other ways.

USC
and UCLA, to name one example, co-run the Center on Biodemography and
Population Health, which is housed on both campuses. The goal is to understand
better the demographic trends and differences in population health. And this
collaborative effort is making important strides in this research arena.

Then
there’s the partnership between UCLA, UC Irvine, and USC to develop and refine
new treatments for stroke prevention, acute therapy, and post-stroke recovery.
Stroke is the leading cause of death in Los Angeles County. And so two years
ago, these three institutions received an NIH grant to research, together,
these important new treatments.

And
just this past August, UCLA, Caltech, and USC received a three-year, multi-million
dollar NSF grant to facilitate a technology and innovation hub in Southern
California. The new center will offer training for faculty, provide guidance for
university-bred startups, and connect those within our universities to
investors on the outside.

We
may hash it out on the gridiron as spirited rivals, but when it comes to
research and education, the relationships between these research universities,
public and private, are far more seamless and symbiotic.

Collaborative
efforts that pair the private sector with the academic world, generate new
ideas, and drive innovation are nothing new in California. Consider the story
of James Lick, told by the aforementioned Carey McWilliams in his book The
Great Exception.

Lick
was something of an eccentric. He came to California from Pennsylvania two
years before the discovery of gold and began buying real estate.

(Smart
man.)

At
one point, as McWilliams reports, Lick owned both Santa Catalina and Lake
Tahoe.

For
reasons unknown, this millionaire became obsessed with the stars and the cosmos.
A year before he died, in 1875, he donated $700,000 to the University of
California — with a single string attached.

That
string was this: the University was required to build an observatory on Mount
Hamilton, above San Jose. It would be the first observatory in California.

Before
the century was out, the University of Southern California was in pursuit of
its own observatory. It was to be built on Mount Wilson. The pursuit was
inspired by a $50,000 gift from a Los Angeles booster named Edward Spence.

The
work on Mt. Wilson, and the scientists it attracted to the San Gabriel
Mountains and Valley below, ultimately led to the founding of Cal Tech, to be
followed by its nearby neighbor, NASA’s Jet Propulsion Lab.

This
was McWilliams’s main point in this section of his treatise: California, early
on, moved away from exploitation of its natural resources, and re-shaped itself
as a state and economy and society built on research, creativity, innovation,
and bold dreams. And at the center of its reshaping were institutions like UC,
and the University of Southern California.

Let’s
get real.

California
is never going to be a smokestack state.

It
is never going to be a call center state.

It
is never going to be a warehouse state.

California,
if it is to pay its dream forward to future generations, must never abandon its
sense of itself as a society built on innovation, and it must never abandon the
institutions that seed that innovation.

California
the Innovation State is the California those who followed the 49ers set out to
build, and it is the California their successors fostered across the ensuing
generations. That California is the California we are fighting for.

Thank
you for your attention, and for the honor of speaking here today. And — dare I
say it — Fight On!